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TOKYO (Reuters) – Policymakers around the world may debate ways to deal with the volatility of bitcoin and other cryptocurrencies but imposing global, across-the-board regulations on their trading won’t be easy, a senior Bank of Japan official said on Thursday.

South Korea and China have tightened regulations but Japan wants to ensure any rules that it adopts won’t hinder innovation, said Hiromi Yamaoka, head of the Japanese central bank’s division on payment and settlement systems.

“Japan’s approach would be to think about how to curb excesses without discouraging innovation,” he said.

Bitcoin soared more than 1,700 percent last year to a record high as investors snapped up the virtual currency on expectations of further steep gains.

Alarmed by the global boom, national authorities across the globe, particularly in Asia, have attempted to put the brakes on trading of cryptocurrencies. Fears of a wider clampdown pushed bitcoin down nearly 20 percent last week.

Yamaoka said while there were some “speculative moves” in the cryptocurrency market, it was hard to say whether bitcoin was experiencing a bubble because cryptocurrencies have no underlying assets to measure their real value.

It will also be hard to define which cryptocurrency needs to be regulated and for countries to agree on a uniform set of rules, given it isn’t easy to come up with common regulations even for traditional banking services, he said.

“It’s uncertain whether global cooperation would mean global regulation…It may mean sharing a common view on the risks involved in cryptocurrency trading and seeking to send out a common message,” he said. “Global harmonization may not necessarily mean global regulation.”

NO MAJOR PROBLEMS SO FAR

France has urged for debate on bitcoin at a meeting of G20 major economies in Argentina in March. Germany has also said any attempt to regulate cryptocurrencies must be on a global scale.

Yamaoka said while cryptocurrency prices have been volatile, they have yet to disrupt Japan’s banking system as cryptocurrencies are hardly used for payments and settlements.

As long as they are not used much for payments and settlements, they won’t affect monetary policy much, he said.

But policymakers need to check how much exposure banks have, how much funds are investing in them globally, and how much leverage investors are taking, Yamaoka added.

“So far, I don’t think there are any big problems. But we need to look carefully,” he said.

“If the exposures turn out to be huge, we may need to follow up and work to maintain financial stability together with the Financial Services Agency.”

Japan’s global share of the bitcoin market jumped after a clampdown last year by Beijing. The government in April granted cryptocurrencies legal status as a means of settlement and recognized several digital currency exchanges.